| Typical loan size | £100,000 to £25m+ |
|---|---|
| Maximum LTV | Usually up to 70–75% of value |
| Term | Typically 1 to 24 months |
| Interest | Charged monthly; retained, rolled up or serviced |
| Charge | First or second charge |
| Exit | Sale of a property or refinance to a mortgage |
| FCA regulated? | Only if secured on a home you or family live in |
Who is this for?
- Buyers at auction who must complete within a set deadline
- Homeowners buying before their current home has sold
- Investors buying property that is unmortgageable until refurbished
- Developers and landlords needing quick capital to secure a deal
- Businesses needing short-term funds secured on property
What is a bridging loan?
A bridging loan is a short-term loan secured on property. It "bridges" a gap between needing money now and having longer-term funds later, from a sale or a mortgage. Terms usually run from a few months to two years.
Bridging lenders focus on the property value and your exit plan, rather than monthly affordability. That makes bridging faster and more flexible than a standard mortgage. It is also expensive, so it works best when it is genuinely short term. Our guide how does a bridging loan work? explains the mechanics step by step.
Common uses include:
- Buying at auction
- Breaking a property chain
- Buying unmortgageable or derelict property
- Funding light or heavy refurbishment
- Securing a purchase before a commercial mortgage is ready
- Raising short-term capital for a business, secured on property
Regulated or unregulated bridging: which do I need?
A bridging loan is regulated by the FCA if it is secured on a property that you, or a close family member, live in or will live in, with at least 40% used as a dwelling. Loans secured on investment, commercial or business property are usually unregulated.
- Regulated bridging: typically used for chain breaks, buying a new home before selling, or funding works on your own home. Terms are usually up to 12 months, and you benefit from FCA consumer protections.
- Unregulated bridging: used by investors, developers and companies for buy-to-let, commercial or development purposes. Terms can be longer and criteria more flexible, but there is less consumer protection.
OMB is directly authorised by the FCA and arranges both. We will confirm which applies to your case at the outset.
The position depends on who borrows and how the property is used. Loans to limited companies are generally unregulated. If you are unsure, we will check before you apply.
International clients and overseas companies can also use bridging finance on UK property, subject to identity and source-of-funds checks.
What is the difference between open and closed bridging?
A closed bridging loan has a fixed repayment date because the exit is already certain, such as exchanged contracts on a sale. An open bridging loan has no fixed exit date, only a maximum term, because the exit is planned but not yet confirmed.
Closed bridges are viewed as lower risk and may be cheaper. Open bridges offer flexibility but lenders will still want strong evidence your exit is achievable within the term.
Bridging can also be a first charge, where it is the main loan on the property, or a second charge behind an existing mortgage. Second charge bridging often needs the first lender's consent and tends to cost more.
Why is the exit strategy so important?
Your exit strategy is how you will repay the bridging loan, and it is the single most important part of any application. The two common exits are selling a property or refinancing onto a longer-term mortgage.
Lenders test the exit carefully. If you plan to refinance, you should check now that you will meet mortgage criteria later. If you plan to sell, the price and timescale need to be realistic. If the exit fails, interest keeps building and default charges may apply. In the worst case, the lender can repossess the property.
We look at the exit first and the bridge second. Where the exit is a buy-to-let or commercial mortgage, we can line it up from the start.
Common exit strategies
- Sale of the property being bought or refurbished
- Sale of another property, such as your current home
- Refinance to a residential, buy-to-let or commercial mortgage
- Funds from an expected source, such as a business sale, with evidence
Can I use a bridging loan for an auction or a broken chain?
Yes. Auction purchases and chain breaks are two of the most common reasons people use bridging finance. Both involve a fixed deadline that a standard mortgage often cannot meet.
Auction purchases
At a traditional auction you exchange contracts when the hammer falls and usually have around 28 days to complete. Most mortgage lenders cannot work to that timescale. A bridging lender can often move quickly, especially if valuation and legal work start before the auction.
Ideally, speak to us before you bid. That way, you know how much you can borrow and whether the lot is likely to be acceptable. Missing a completion deadline can mean losing your deposit.
Chain breaks
A chain-break bridging loan lets you buy your next home before your current one has sold. The loan is secured on one or both properties and is repaid when your sale completes. Where you live in the new home, it will usually be a regulated bridge.
This can save a purchase when a buyer pulls out. It also means carrying two properties and paying bridging interest until the sale goes through. If your home takes longer to sell, or sells for less, costs rise. A realistic asking price and sale plan are essential.
Can I get a bridging loan for refurbishment?
Yes. Refurbishment bridging funds the purchase and works on property that may not qualify for a mortgage in its current condition, such as a home without a working kitchen or bathroom.
- Light refurbishment: cosmetic or non-structural works that usually do not need planning permission.
- Heavy refurbishment: structural work, change of use or works needing planning or building regulations approval.
Some lenders release works funding in stages, and many can lend against the expected value once works are complete. Larger ground-up projects usually need development finance instead.
Lenders will want a schedule of works, costings and, for heavier projects, details of contractors and any planning consents.
Once works are complete, the property is revalued. A higher value can help you refinance onto a longer-term mortgage, or sell at a better price. Valuations are never guaranteed, so build a margin into your plans in case the end value comes in lower.
What does a bridging loan cost?
Bridging interest is charged monthly rather than annually, and overall costs are much higher than a mortgage. Expect an arrangement fee, valuation fee, both sides' legal fees and sometimes an exit fee.
Interest can be paid monthly, rolled up to the end, or retained from the loan at the start. Retained or rolled-up interest reduces the cash you receive or increases the amount you repay. We set out the total cost clearly so you can compare it with the benefit of the deal. You can model figures with our bridging calculator.
Allow for any minimum interest period, which can apply even if you repay early. Bridging should never be used to fund ongoing costs you cannot otherwise afford.
How OMB helps
Bridging terms vary widely between lenders, including valuation approach, legal requirements and fees. As a whole-of-market broker, we compare specialist lenders, check the full cost and plan the exit from day one. We also coordinate valuers and solicitors so deadlines are met wherever possible.
Run the numbersInterest, fees, gross loan and net funds for a short-term bridge.
Bridging loan calculatorHow we arrange it
- Free 15-minute call
- We agree the exit strategy and loan structure
- We compare specialist bridging lenders and obtain terms
- Valuation and legal work run in parallel
- Completion, then we help arrange your exit
Example cases
Illustrative examples based on the type of case we arrange. Not specific clients; every case is different.
£185,500 auction bridging loan at 70% LTV completed in 16 days in Southend
£1.6m regulated bridging loan at 39% LTV to save a chain in Hampstead
£595,000 bridging loan at 70% LTV to buy and extend a short-lease Kensington flat
From the blogAuction finance: how to complete in 28 days
Read the articleFrequently asked questions
How quickly can a bridging loan complete?
Bridging is designed to be quicker than a mortgage, but the speed depends on the valuation, legal work and how quickly you provide information. Straightforward cases with good title and prompt solicitors move fastest. Starting early, ideally before an auction or deadline, makes the biggest difference.
How much can I borrow with a bridging loan?
Most bridging lenders lend up to around 70–75% of the property's value. Some can go higher if you offer additional security over other property. For refurbishment, some lenders also consider the value after works. The maximum also depends on the interest being retained or rolled up.
Do I need good credit for a bridging loan?
Not necessarily. Bridging lenders focus mainly on the property and the exit strategy. Adverse credit may be accepted, but it could affect the terms. Your credit history matters more if your exit relies on refinancing to a mortgage later. Lenders will want an explanation of any recent missed payments.
Do I need to prove income for a bridging loan?
Often not in the same way as a mortgage, because interest can be retained or rolled up. Lenders still need to be satisfied about your exit. For regulated bridging, lenders must check that the loan is affordable and suitable for you.
What is a regulated bridging loan?
It is a bridging loan secured on a property that you or a close family member live in, or will live in, with at least 40% used as a dwelling. It is regulated by the FCA and usually limited to 12 months. Chain breaks are a common example.
What happens if I cannot repay my bridging loan on time?
The lender may charge default interest and fees, and the debt can grow quickly. Some lenders will agree an extension, but this is not guaranteed. In the worst case, the lender can repossess and sell the property. Talk to us early if your exit is delayed.
What is the difference between a first and second charge bridge?
A first charge bridge is the main loan secured on a property. A second charge bridge sits behind an existing mortgage and needs that lender's consent in many cases. Second charge bridging is usually more expensive and has lower loan-to-value limits.
Can I get a bridging loan on a property with no kitchen or bathroom?
Yes. This is a common use of bridging, because most mortgage lenders will not lend on uninhabitable property. Once works are complete, you can refinance to a residential or buy-to-let mortgage, subject to meeting that lender's criteria. Plan the works carefully so they finish well within the bridging term.
Can a limited company take out a bridging loan?
Yes. Many bridging loans are made to limited companies and SPVs, particularly for investment and development. Lenders will usually ask directors for personal guarantees. These loans are normally unregulated. Lenders will also look at the company structure, the directors' experience and the strength of the exit plan.
Can I use bridging finance for commercial property?
Yes. Bridging is often used to buy commercial or semi-commercial property quickly, or to buy property that needs work before a commercial lender will lend. Exit is usually a commercial mortgage or sale. These loans are unregulated. Lenders will consider the property's use class, condition and lettability.
Are there early repayment charges on bridging loans?
Many bridging loans have a minimum interest period, often one to three months, rather than traditional early repayment charges. Some also charge an exit fee. Always check the minimum term and exit fees, as these affect the total cost if you repay early.
Is a bridging loan a good idea?
It can be when speed matters and the exit is clear and realistic. It is expensive, short-term borrowing secured on property, so it should not be used without a firm repayment plan. We will tell you honestly if a mortgage or other option would serve you better.
Important: Bridging and development finance are short-term, secured borrowing and can be expensive. You need a clear, realistic exit plan. Loans secured on a home you live in may be FCA-regulated; most others are not. Your property may be repossessed if you do not keep up repayments.